By Adam Moulson, Acting CEO of Griffin 

“Change is the law of life. And those who look only to the past or present are certain to miss the future,” said John F. Kennedy. Still, when imagining what lies ahead in the next decade of banking, it helps to examine several patterns that led us to where things currently stand at the intersection of technology and finance.

First, one of my biggest concerns has always been the ticking time bomb that is the incumbent IT infrastructure at big banks. As a technologist, I see a major misalignment of incentives. Upgrading and replacing IT systems is a decade-long initiative, but the average tenure of the executive responsible is hardly ever more than five years. This leads to a lack of continuity, with significant overhauls forever being delayed for “just one more year”.

Many banks now have layered modern API infrastructure on top of a legacy mainframe core, which is destined to end in disaster. I read one report showing a staggering 95 per cent of banking executives reported their legacy systems and outdated core banking modules hinder their growth strategies. While that statistic is enormous, frankly, it does not surprise me.

Secondly, consumers have come to expect every aspect of their lives to be digital-first, including financial services. Fifty per cent of consumers now interact with their bank through mobile apps or websites at least once a week, which is a jump from 32 per cent two years ago. Yet the banking sector has not kept pace with the speed of innovation.

Becoming a bank is difficult and resource-intensive, so most fintechs do not even try to tackle the mountain of documents, regulation analysis, input juggling, and audit trails demanded from the process. It remains an expensive and complex process for fintechs to build and launch apps.

Consumer expectations around seamlessness have only accelerated through the pandemic. We have seen how the latest technology can help people to manage their money and their lives in new and better ways. Many consumers tried new omnichannel models and reported those methods are here to stay, with over half (56 per cent) saying they intend to continue using these new models in the future.

Over recent years, our mobile devices have brought all manner of products and services to our fingertips, and ideally, this should extend to financial services. Ultimately, money brings security, success, or adventure, and banking should be a stepping stone towards those goals and experiences, not an obstacle.

When we look at these trends, it becomes evident that the future of banking has several key areas to address. First, it will be technology-led. Secondly, embedded finance will lead the way in providing breathtakingly smooth experiences. This will contribute to the third aspect, which revolves around unprecedented levels of convenience to the customer.

What does being technology-led mean? Challenger banks are stepping in and providing alternatives to the way banking has always been done. A new approach to banking is built on radical transparency and fundamentally modern software, which is set to underpin the future of financial services infrastructure. Consumers can unlock massive value when companies can quickly build and embed financial products.

At Griffin, we are building an API-first banking as a service (BaaS) platform using modern tech infrastructure and an intuitive UI to help fintechs embed financial services easily. We believe in combining the power of intuitive software with the security and reliability of an authorised bank. We’ve recently hit a significant milestone by submitting our application to become a bank to the UK regulators, the PRA and FCA.

Our approach reflects how the modern consumer demands a contextual, seamless digital experience. This is where embedded finance comes in, which will likely go mainstream this year with SMEs, tech startups, and traditional brands racing to optimise the customer experience with contextual financial services. This will set the tone for the decade ahead.

Embedded finance refers to banking-like services offered by nonbanks. The most innovative companies have seen how embedding financial products into the customer experience allows them to monetise their brands and increase customer satisfaction and loyalty. In the next decade, it’s not hard to imagine that every company will eventually be a fintech company, with embedded finance allowing consumers to make payments, manage their funds, and access credit quickly and efficiently.

This contributes to delivering unprecedented levels of convenience to the customer, which is also reflected in the shift to omnichannel purchasing methods. It has been over a decade since Amazon introduced the one-click checkout method, which has now become standard practice and paved the way for purchasing through platforms like Instagram and TikTok. The fewer layers the consumer has to move through, the more likely they will buy. Over the next decade, I imagine digital wallets will overtake physical credit cards, with consumers demanding brands ditch the manual checkout process.

Lastly, we all know that there is a lot of noise being generated by Web3. Yet, with peer-to-peer transactions, there also comes a lack of oversight or accountability, which disables adequate user protection. Over the next decade, I see Web3 developers racing towards solutions to address the simultaneous challenges of accessibility, usability, and consumer protection. This will deliver the confidence that consumers need to adopt it at scale and create a safe environment for financial transactions.

All in all, the future of banking is going to belong to those who are currently challenging the status quo and daring to take bold leaps into uncharted territory.

About Griffin

Griffin is making the bank you can build on. The company is developing an API-first, full-stack Banking as a Service platform that lets companies focus on building products for their customers, not managing back-end infrastructure and compliance operations. Griffin was founded by Silicon Valley engineers David Jarvis and Allen Rohner (who co-founded tech unicorn CircleCI) and a team of banking and technology executives from the Bank of England – PRA, Nasdaq, Visa HSBC, Form3, Monzo, SWIFT, GoCardless and more. Griffin is based in the UK and backed by investors EQT Ventures, Tribe Capital and Seedcamp. Learn more: www.griffin.sh